Stocks

[glovesetc]

the low was set ?????

perhaps when it bounced off the 7900 level . It could trade in a range of 7950 to 8999 as the new resistance level is probably around 9000 big time . However having said that if the G-7 and the 20 member IMF do not come up with something good this weekend and viable Monday could be very rough and I can not see 27 people agreeing on anything in 3 days . Good thing it was not 27 lawyers cause if it was it would be more like 3 years before they could evewn agree on a chairperson - lol !!!!!!If you want to find out what the futures are doing in the stockmarket go to http://www.bloomberg.com and then click on market data , click on stocks when the menu comes down , then look to your left and click on futures . At 11:55 EST time they were down 218 points .:grin::laugh::cool2:

 

[N&B]

I've been calling 7800 in other stock msg boards since Mid-Aug. I think that may be optomistic at this point looking down the road a piece. If it breaks 7800 I'm very inclined to believe 6200 before 9000. 788x intra day was a relief here, as it DID show how dismal things are. Under 8300 at close, bring on the test of 78xx again. Gold down to about US$710.

MHO here: there will be a disconnect between gold and the Stock Mkt on the ensuing bear plunge, and gold will recover its luster and begin the climb higher. I am still holding here, and not adding.

LUV is catching the fan-splattered dung... still a solid Co, but at $10, I've added a few hundred more. Total is only 600 shares so far, and that might be the limit of risk for quite some time. The rest is ca$h, and I do have bills to pay, and taxes.

 

[darco77]

@n&b

A few other things to note:

3 month US Treasury yield is down to the lowest levels since LEH went BK. And VIX isn't nearly as sky-high as it was the last time the SPX was down near these lows... if it has more room to run, then the market has more to give up (?) Throw in some bad INTC outlooks for the hell of it. Yeah, tomorrow should be a hell of a day

 

[sagefr0g]

questions, questions

if i want to sell some shares in a stock, what happens if nobody wants to buy them? does the company that issued the stock have to buy it back?

when a company issues stocks is there a limit on the number of shares that they can issue?

what makes the value of a stock rise and fall? who sets the prices or how are they set. i mean one minute your stock is valued at $1.00, then next $0.90 and later $1.10 . just how does that come about?

 

[darco77]

if i want to sell some shares in a stock, what happens if nobody wants to buy them? does the company that issued the stock have to buy it back?

For the majority of publicly traded companies, there is enough supply and demand for the stock that you can buy or sell almost instantly, anytime the market is open. There are a handful of smaller companies with very low trading volume. The stocks of these companies can be difficult to buy/sell at what you would consider a fair price. But they will still trade in the open market. Generally, the company itself is not in the business of buying back its own shares. When that happens, it's a high profile event.

when a company issues stocks is there a limit on the number of shares that they can issue?

Not at all. Plenty of factors go into determining how many to issue, and the process is pretty complex.

what makes the value of a stock rise and fall? who sets the prices or how are they set. i mean one minute your stock is valued at $1.00, then next $0.90 and later $1.10 . just how does that come about?

Price is determined by good ol' supply and demand, the basis of commerce. The change of a price in a stock is very similar to the change of price of a home, used car, sports tickets, etc (or, any item that is bid upon, rather than set at a fixed price). If you are selling your home for $300k, and a bidding war ensues (a la 2005), your going to sell your home for more than your asking price. It also follows that if no one is interested in your home at $300k, you'll give in and sell it for less than your asking price (a la today). The difference with stocks is there are many, many shares available, and plenty of buyers and sellers, at any given second. Also, the stock of a given company is fungible; one share of IBM is no different than any other share of IBM. If IBM is currently trading at $90, and there are more buyers than sellers in the market, the price will move up due to excess demand. Conversely, the price will move down from $90 if there are more sellers than buyers. For a liquid stock like IBM, there is so much interest in buying/selling the stock, these fluctuations happen on a second-by-second basis.

This is a bit simplified, but hopefully gives you a glimpse of how this process works :cool2:

 

[sagefr0g]

For the majority of publicly traded companies, there is enough supply and demand for the stock that you can buy or sell almost instantly, anytime the market is open. There are a handful of smaller companies with very low trading volume. The stocks of these companies can be difficult to buy/sell at what you would consider a fair price. But they will still trade in the open market. Generally, the company itself is not in the business of buying back its own shares. When that happens, it's a high profile event.



Not at all. Plenty of factors go into determining how many to issue, and the process is pretty complex.


Price is determined by good ol' supply and demand, the basis of commerce. The change of a price in a stock is very similar to the change of price of a home, used car, sports tickets, etc (or, any item that is bid upon, rather than set at a fixed price). If you are selling your home for $300k, and a bidding war ensues (a la 2005), your going to sell your home for more than your asking price. It also follows that if no one is interested in your home at $300k, you'll give in and sell it for less than your asking price (a la today). The difference with stocks is there are many, many shares available, and plenty of buyers and sellers, at any given second. Also, the stock of a given company is fungible; one share of IBM is no different than any other share of IBM. If IBM is currently trading at $90, and there are more buyers than sellers in the market, the price will move up due to excess demand. Conversely, the price will move down from $90 if there are more sellers than buyers. For a liquid stock like IBM, there is so much interest in buying/selling the stock, these fluctuations happen on a second-by-second basis.

This is a bit simplified, but hopefully gives you a glimpse of how this process works :cool2:

thanks much darco77.
i guess i just have one more question.
are companies that issue stock legally required to redeem those shares if no one esle will buy them?

 

[Canceler]

are companies that issue stock legally required to redeem those shares if no one esle will buy them?

No.

But if the company were to buy the shares back, it would probably be at the market price. Which would be zero, since no one wants to buy them. So why bother?

This situation would occur only if you managed to buy shares in a company that was in seriously deep trouble, like out of business, or soon to be. If you are planning to buy shares in such a company, I urge you to reconsider!

 

[darco77]

thanks much darco77.
i guess i just have one more question.
are companies that issue stock legally required to redeem those shares if no one esle will buy them?

Canceler is right on. I'll elaborate on his points.

A public company can raise capital (CASH) in a few ways. The most popular are debt and equity. Debt is, as it sounds, borrowing money. A company will do this by selling bonds, which are a structured form of debt. Equity is the industry term for issuing stock, which is what you are asking about. When a company issues stock, they are selling a tiny fraction of the company itself. This technically makes a stockholder an owner. With ownership comes the ability to have a say in what happens in management, although you need to hold a large stake of equity (think 10% or higher) to actually have a voice.

As Canceler said, the only time you may have your shares redeemed by the company itself is when the company is failing (aka bankrupt). When a company fails, there is a pecking order on who gets paid first, assuming there is any cash left. The first group paid are those that hold Preferred Stock, which is very limited. Second group are the bond holders. The last group are the owners of the company, which included the founders, big stake holders, and the average joe from the streets who held 100 shares of stock... yeah, you hold even 1 share of stock, and you are considered an owner and are last to be paid. If I remember correctly, when Lehman Brothers failed a few months ago, the bond holders got about 15% of their investment back. Needless to say, the equity holders that didn't sell before the stock hit the floor got essentially nothing.

Keep in mind, these grim situations (prior to September 2008) are rare. Most of the time, you'll either make some bucks, or lose your ass when the stock plummets. The bankruptcy scenario you ask about is the exception.

Simplified again, but I hope it helps :cool2:

 

[sagefr0g]

...
Simplified again, but I hope it helps :cool2:

yes very much so.
lmao, i'd probably ask a 'million' questions if i thought i could get away with it.
so but it sounds a lot like it's an auction, sort of thing with the stock exchange being sort of the auction house?

beyond the wrangling over buying and selling stocks what's the purpose of the whole thing? i mean, like the companies that have issued all these stocks are they profiting from all this action other than their intial selling of the shares they issued?
if these companies all of a sudden offered a bunch more shares for sale wouldn't that possibly drive the price of their own stock down?

 

[darco77]

so but it sounds a lot like it's an auction, sort of thing with the stock exchange being sort of the auction house?

Kind of. Not completely analogous, but close enough for our discussion. Much faster

beyond the wrangling over buying and selling stocks what's the purpose of the whole thing? i mean, like the companies that have issued all these stocks are they profiting from all this action other than their intial selling of the shares they issued?

Great question. Now I see why others refer to you as the "wise one". The company itself only makes money on the initial public offering (IPO), the day when the stock goes up for public sale for the first time. In fact, this is the reason most companies decide to go public: to raise cash, at the expense of surrendering a bit of control. However, since the founders and executives typically hold massive amounts of shares in their personal accounts, it is in their interest to keep the company in good standing and bolster the stock price.

if these companies all of a sudden offered a bunch more shares for sale wouldn't that possibly drive the price of their own stock down?

Yes. I commend you on your observation: any time a commodity faces oversupply, the price goes down. That's what a "secondary issue" (industry term) effectively does to a stock. But they can't do it "all of a sudden"ly. It comes with pre-announcement, and the market adjusts. Same thing when a company buys shares back. It will be pre-announced, and the share price will go up.

Again, sagefr0g, over simple, but happy to share. :cool2:

 

[sagefr0g]

wow this stuff is as interesting as gambling

....

Again, sagefr0g, over simple, but happy to share. :cool2:

thank you again darco.
so you've inspired me to start doing some reading lol.
such as
http://en.wikipedia.org/wiki/Stock_exchange and loads more.
so any way wikipedia has lots of stuff about that stuff lol.
and in my reading i'm finding your answers are right on.
thanks again.

 

[darco77]

You're ready for this: Ed Thorp.

"The overlap of interest between gambling and the stock market is very high. It's an amazing phenomenon," says Thorp. "But there are so many similarities and so much one can teach you about the other. Actually, gambling can teach you more about the stock market than the other way around. Gambling provides an analytically simpler world, and you can see principles and test theories."

http://webhome.idirect.com/~blakjack/edthorp.htm

The format is a bit messy, but the content is pure. It comes from the Godfather himself.

 

[sagefr0g]

You're ready for this: Ed Thorp.

"The overlap of interest between gambling and the stock market is very high. It's an amazing phenomenon," says Thorp. "But there are so many similarities and so much one can teach you about the other. Actually, gambling can teach you more about the stock market than the other way around. Gambling provides an analytically simpler world, and you can see principles and test theories."

http://webhome.idirect.com/~blakjack/edthorp.htm

The format is a bit messy, but the content is pure. It comes from the Godfather himself.

thank you for that darco. i'd seen Dr. Pitman's stuff before, long ago, but that stuff is more meaningful now. lol
here's some more of Thorp's stuff, nice and consolidated:
http://edwardothorp.com/index.html
interesting about that Black-Shoels-Merton equation and all, how apparently Thorp shoulda got more credit:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1012075
and the Long Term Capital Management debalcle:
http://www.youtube.com/watch?v=xGfXyVtiB1E
nobel lauraets losing there a$$'s.

lol, not that i really understand all that stuff. trying to understand it best as possible though.

 

[Opinion]

Rigged

The stock market is rigged if only by the government deciding which companies to save and which to not!

If companies get so big they cannot be allowed to fail then the government should not allow mege mergers!